Sterling under pressure as UK government crumbles

After a fairly buoyant period for the UK currency we have seen falls for the third day in a row as the markets take stock of recent Cabinet resignations and the appalling figures expected from the local and European elections. There was also the concern that Gordon Brown could receive a significant leadership challenge over the coming days and weeks which would further destabilise the UK government and possibly impact upon the recovery of the UK economy.

After a disastrous 12 months for the UK currency there were signs of recovery just a few weeks ago as potential green shoots started to appear in relatively niche areas of the UK economy. However, much of the good work over the last few weeks has been undone with the ongoing turmoil in the UK government and a general election which could be called at any time. At the moment Gordon Brown is resisting calls for a general election despite the fact we stand on the precipice of a further downward lurch in the UK economy.

In all honesty it seems as though the UK government has lost the confidence of many markets and investors around the world, something which will be very difficult to reclaim in the relative short space of time left for the authorities.

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